Tuesday, November 20, 2007

November Lost Legacy Prize Won By Greg Blankenship of the Illinois Policy Institute

What a great deal of good sense Greg Blankenship writes on Adam Smith in the Chicago Daily Observer, 19 November, (here).

This man, writing in the very home of the mythical, make-believe Adam Smith from Chicago, makes an outstanding case for the views of the real Adam Smith, from Kirkcaldy. It’s a pleasure to read.

Greg Blankenship, President of the Illinois Policy Institute, is outright winner of the Adam Smith’s Lost Legacy Prize for November (and a hot candidate for the annual prize too)’.

His piece is entitled: “The Left Mis-Uses Adam Smith to Their Own Purposes” and opens with:

“He may be the father of modern economics, or perhaps the father of social science but to call Adam Smith the father of capitalism – as one close colleague puts it – is like calling Sir Isaac Newton the father of gravity. Newton didn’t invent gravity; he just figured it out. Ditto for Smith.”

He continues:

‘Capitalism was a term coined by Karl Marx to demean liberty and free markets. By labeling free markets as an ideology – rather than an empirical observation (the methodology of the Anglo-Scottish Enlightenment) into what was occurring in Smith’s world – it was hoped that the reality that Smith uncovered could be overthrown and replaced with a new vision of what the world ought to be like in the minds of the people who, of course, would run it.”

He tackles the vexed question of progressive income taxes, in favour of which Adam Smith is often called into evidence for the prosecution by the left, and he takes to task one Ralph Martire, a fellow columnist on the Chicago Daily Observer, for his lumping of Adam Smith’s views about progressive taxation on luxury consumption goods, house rents and the carriage of luxuries.

The tactic hasn’t been lost on fellow travelers of the local sort, either. Recently on this very site Ralph Martire wrote:

“That’s not only unfair, it also contravenes sound, capitalist tax policy, as conceived by the father of capitalism, Adam Smith. Smith contended tax burden ought to be progressive in a capitalist economy—i.e. impose a greater burden on the affluent than everyone else, because under capitalism the affluent will always receive a disproportionately greater share of economic growth.”

While Martire is correct that Smith was for progressive taxes, but is ‘disingenuous at best in applying progressivity to income taxes. This is because Adam Smith rejected income taxes as, “absurd and destructive” ’.

Adam Smith continues with examples of the bad effects of progressive income taxes in Wealth Of Nations, Book V Article III, ‘Taxes upon the Wages of Labour’ (pp 864-67). To which Greg Blankenship comments:

‘Adam Smith’s idea of progressivity was that people who purchase luxury items such as a carriage should pay more in taxes for that purchase than a dirt farmer buying a wagon. Necessities of life should be taxed less than luxury items. Smith also believed that property was better source of taxation and than taxing capital, stock or production. Again, this is totally at odds with Ralph Martire’s vision of tax reform.’

‘The real lesson of Adam Smith isn’t in his maxims on taxation or his discussion on public education. The real lesson is Smith’s commitment to natural liberty and that government wasn’t the solution, it was the problem.’

Every reader should read Greg Blankenship’s article in the Chicago Daily Observer (here).

It’s the best thing to have been written about Adam Smith’s real ideas this month (and perhaps a few others too).